TDSAT Sets Aside TRAI Order on Predatory Pricing

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Thursday dismissed the telecom regulator's order dated February 16, 2018 on predatory pricing due to lack of "transparency".

The tribunal's order comes as a respite to Vodafone Idea - erstwhile Vodafone India and Idea Cellular -- and Airtel who had challenged the TRAI order in March.

"To allow freedom from requirement of non-predation till acquisition of 30 per cent of total activity in a given market prima facie appears to be an extreme step and unnecessary abdication of its regulatory powers by TRAI in the context of tariff conditions and their enforcement," the TDSAT order said.

As per the TRAI rule, a tariff could be predatory only if an operator with over 30 per cent market share offers tariffs lower than the average variable cost. With Thursday's order, the TDSAT has struck down this rule.

"If a new entrant needs to be protected from the rigours of non-predation, it can be done through precision like 'Welcome Offer' and Promotional Scheme as availed recently by Reliance Jio. These can be formalised as just exceptions," it said.

The order noted that the "impugned Tariff Amendment Order is set aside in so far as it changes the concept of SMP (Significant Market Power), non-predation and the related provision".

It ordered TRAI to reconsider the provisions within six months.

"TRAI shall keep all the relevant fact in mind while dealing with the matter in the light of this order of remand of the issues relating to non-predation and SMP (Significant Market Player)," it added.

The tribunal in its 41-page order said that the yardsticks must be objective and known to all the service providers or the task must be left to be dealt with by a complete code such as the Competition Laws so that the competent authority can decide a complaint alleging predation.